Waltons Stores (Interstate) Ltd v Maher (LAWS2381)

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Citation: Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.

This information can be found in the Textbook: Edgeworth et all, Sackville and Neave's Property Law Cases and Materials, 8th edition, Lexis Nexis, 2008, pp. 392-401 [4.132].

Contents

Background facts

  • Walton Stores negotiated to lease land from the Mahers.
  • There was a condition that the Mahers demolish the existing building and build a new one as per Walton’s specifications.
  • Maher’s solicitors prepared an agreement which included some modifications, sent it to Waltons solicitors which said they would let them know by tomorrow if they disagreed with the modifications.
  • No further communication was made.
  • Maher signed the contract, gave it to Walton, who delayed signing the contract even though he knew Maher began demolishing the building and building the new one.
  • Finally, when the building was already 40% completed, Walton backed out and refused to sign.

Legal issues

Judgement

  • Firstly, both promissory and proprietary estoppel are based on the unconscionability of encouraging an assumption and that departing from it to the detriment of another, they are now merged.
  • For estoppel to found an action, the party sued must have acted unconscionably and to the detriment of the party suing. Because unconscionability is the basis of the estoppel action, it is an essential requirement that has to be established.
  • When is conduct unconscionable?
    • Failure to fulfil a promise does not of itself amount to unconscionable conduct. Nor does mere reliance on an executory promise where the promisor changes his position amount to unconscionable conduct. Something more is required.
    • The fact that having created an assumption that a contract will come into existence or that a promise will be performed or not insisted upon and then remaining silent, while knowing that the other party was relying on the assumption to his detriment, would be sufficient to establish unconscionable conduct.
  • Waltons was aware of Maher’s actions (in demolishing the old building and starting to build the new one) and yet did nothing either to correct the assumption or to stop Maher from continuing even though it had taken the decision not to lease the premises.
  • Waltons’ behaviour was unconscionable and that as a result of that behaviour Maher had suffered detriment while relying upon the assumption that Waltons had created – and, that relying upon the assumption was, in the circumstances, reasonable.
  • Thus, equitable estoppel arises for Maher.

References

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